Oil & Gas Prices - April 12

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - April 12

Post by dan_s »

At today's luncheon in Houston I will present why I believe oil prices could go over $100/bbl this summer.

Opening Prices
> WTI is up $0.60 to $82.13/bbl, and Brent is up $0.58 to $86.19/bbl.
> Natural gas is down -1.1c to $2.175/MMBtu.

AEGIS Notes with my comments in blue
Crude Oil

Oil surges to highest since November following the U.S. March CPI print
May ’23 WTI gained 60c this morning to trade around $82.12/Bbl

March CPI rose 0.1% from last month, below the estimated 0.2%
The year-over-year rise in Core CPI, which excludes food and energy prices, was 5.6%, in line with the expected increase of 5.6%
However, Fed is expected to hike interest rates at least once more due to strong consumer prices and the labor market while monitoring banking turmoil < Inflation will get worse this summer as transportation fuel prices increase
Additionally, treasury yields fell while equities rose following the CPI report

The U.S. dollar fell to its lowest in nearly two months, making oil more affordable for holders of other currencies

Kurdish oil exports remain halted as Iraq negotiates with Turkey

Russia's flagship Urals crude price nears $60/Bbl cap (BBG)
Russia's Urals crude price is approaching the $60 limit, with the delivered price to India's west coast over $73/Bbl as of April 6, according to Argus data
Argus data shows an $18/Bbl gap in Urals cargoes' shipping and delivery points, with Russia’s Baltic ports Primorsk and Novorossiysk selling at around $55/Bbl
However, it's difficult to assess the actual price due to the emergence of shadow vessels and trading companies with unclear affiliations
Despite surging Urals crude exports to India and China, tighter sanctions are starting to impact Russia's output, with the country pledging to cut 0.5 MMBbl/d through the end of the year

Natural Gas

Natural gas prices decline slightly, down 1.1c to trade around $2.18/MMBtu
Weather forecasts shifted cooler, with the Lower 48 forecast cooling by 3.8 °F over the two-week period
Tomorrow's U.S. ngas storage report should show a decline in the surplus to the 5-year average storage level.

Coal usage declines relative to gas and renewables (BBG)
For a second consecutive year, the amount of power generated from coal fell as utilities retired coal plants and constructed new wind and solar facilities
According to the EIA, coal is expected to generate 17% of US power in 2023, down from 20% in 2022
About 5% of total US coal generation capacity was retired in 2022, or 11 GW

New petition adds to Mountain Valley Pipeline woes (BBG)
A week after losing a crucial water crossing permit, environmental groups have filed a petition against MVP alleging that the Fish and Wildlife Service did not adequately assess the risk to endangered species
The petition was filed on Monday in the US Court of Appeals for the Fourth Circuit, the same court that pulled one of MVP’s permits last week
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - April 12

Post by dan_s »

Trading Economics
"WTI crude futures rallied 2% to above the $81 per barrel mark, closing in on its highest level since late January, buoyed by prospects of higher Chinese demand and tighter global supplies. Recent data showing softer-than-expected consumer inflation in China suggested an uneven economic recovery, spurring expectations that the world's second-largest economy and top importer could make further efforts to boost growth. On the supply side, OPEC+ announced last week that it will reduce output by 1.16 million barrels per day from May until the end of 2023, offering significant support to prices. After the announcement, Saudi Arabia raised its May crude prices to term customers in Asia and the US."


If WTI stays over $82 through Friday's close, $81 that was a strong resistance level will become a strong floor.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - April 12

Post by dan_s »

(Bloomberg) -- Oil rose to the highest intraday price this
year as slowing flows from Russia, production cuts by OPEC+ and
falling US inventories pointed to a tightening market.

West Texas Intermediate climbed above $83 a barrel,
bolstered by a broader relief rally triggered by signs of
moderating US inflation. Russian shipments slid below 3 million
barrels a day for the first time in eight weeks, after Moscow
vowed to cut production. And, in the US, oil inventories at the
key Cushing, Oklahoma, storage hub slid for a sixth week to
hover near the lowest since January.

The oil market’s structure is also signaling strength as
WTI’s prompt spread — the difference between its two nearest
contracts — is trading at 9 cents in backwardation, which would
be the highest this year on a closing basis. WTI’s move into a
backwardation and the pace of the changes across the futures
curve recently are bullish signals for algorithm-driven traders
to take up long positions, said Ilia Bouchouev, a former trader
and an adjunct professor at New York University.


The combination of algo traders piling in and declining
inventories sets the stage for stronger prices heading into the
summer, he added. < When the algo gang gets on the upside, the short sellers head for the exits.

Crude has rebounded from the 15-month low seen in March
after the Organization of Petroleum Exporting Countries and its
allies announced plans to cut output. Traders are also sticking
to the view that Chinese demand will pick up. In the Middle
East, pipeline flows from Iraq’s semi-autonomous Kurdistan
region remain halted.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - April 12

Post by dan_s »

Closing Prices:
> Prompt-Month WTI (May 23) was up $1.73 on the day, to settle at $83.26
> Prompt-Month Henry Hub (May 23) was down $-0.093 on the day, to settle at $2.093
Dan Steffens
Energy Prospectus Group
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